“The Association between Intelligence and Financial Literacy: A Conceptual and Meta-Analytic Review”, Zoe Callis, Paul Gerrans, Dana L. Walker, Gilles E. Gignac2023-09 (IQ & SES)⁠:

• Financial literacy correlated positively with general intelligence (r ≈ 0.60).

• Financial literacy correlated positively with quantitative knowledge (G_Q), crystalized intelligence (G_C), and fluid intelligence (G_F): r ≈ 0.50–0.70.

• G_Q partially mediated the effect of cognitive ability on financial literacy.
• G_C and G_Q (combined) fully mediated the effect of G_F on financial literacy.

• Financial literacy may be considered a stratum I ability within the CHC model.

Financial literacy is positively associated with intelligence, with typically moderate to large effect sizes across studies. The magnitude of the effect, however, has not yet been estimated meta-analytically. Such results suggest financial literacy may be conceptualized as a possible cognitive ability within the Cattell-Horn-Carroll (CHC) model of cognitive abilities.

Consequently, we present a psychometric meta-analysis [k = 64, k = 64, n = 62,194] that estimated the true score correlation between cognitive ability and financial literacy.

We identified a large, positive correlation with general intelligence (r′ = 0.62). We also found that financial literacy shared a substantial amount of variance with quantitative knowledge (G_Q; via numeracy; r′ = 0.69; k = 42, n = 35,611), comprehension knowledge (crystallized intelligence; G_C; r′ = 0.48; k = 14, n = 10,835), and fluid reasoning (fluid intelligence; G_F; r′ = 0.48; k =20, n = 15,101). Furthermore, meta-analytic structural equation modeling revealed G_Q partially mediated the association between cognitive ability (excluding G_Q) and financial literacy. Additionally, both G_C and G_Q had statistically-significant direct effects on financial literacy, whereas the total effect of G_F on financial literacy was fully mediated by a combination of G_C and G_Q.

While the meta-analyses provide preliminary support for the potential inclusion of financial literacy as primarily a G_C or G_Q ability within the CHC taxonomy (rather than G_F), the review revealed that very few studies employed comprehensive cognitive ability measures and/or psychometrically robust financial literacy tests. Consequently, the review highlighted the need for future factor analytic research to evaluate financial literacy as a candidate for inclusion in the CHC taxonomy.

[Keywords: financial literacy, cognitive ability, intelligence, comprehension knowledge, numeracy]